Automation, Contractualitation and Nike Withdrawl From Indonesia?

“For
many years, I’m willing to start off my work early. I begin at 6 AM
even though our work hour starts at 7 AM,” N said, a 41 years old
woman. It has been nineteen years since N worked at Kaho 2, Inc.
Bekasi West Java. “What is the feedback from the company?!,” N
yelled.

“My
line make clothes for Nike,” told N, that she works in the sewing
section. “I made shorts for women. I must finish 200 pieces in an
hour. 1800 to 2000 could be made in a day. If we are making sports
club pants, we can make until 500 pieces a day. The work is
overwhelming.” N knows that the clothes she made are expensive
therefore the company and Nike could gain enormous profit from her
hard work.

“In
the sewing section, it will always be rushed by targets,” N’s
friend chimed in. “When it is time to rest, we can only just eat.
Sometimes even when it is not the time to pray, we pray first. Our
friends said, even though it is not the time to pray yet, it is
alright, God is omniscient.” T said, a 37 years old woman who has
been working for twenty years.

“If
we don’t reach the
target, we would be yelled using rude words,” said another woman
worker. “In 2014, there was a line which didn’t reach its target.
Everybody in that line were put in the scorching sun for four hours,”
she added.

“My
section (printing) is just normal,” R replied, a 39 years old
woman. “But there is one time when I started off the work at 6 am
for an export. It wasn’t considered as overtime. We didn’t
think it as a problem, as long as the company keeps moving forward
and we can still work.” R has been working for seventeen years.
Since her husband had been fired from Gunung Garuda, Inc. R became
the backbone of the family.

N,
T and R do not deny the fact that their job can support their family,
even if their wage are not sufficient to make ends meet. for all
their family’s needs. “I am a single parent. My kid is in
college, she will be graduated soon. . Alhamdulillah.
But if I don’t work, where
can I get the money for my family from?! ,”
N complained while explaining that besides working at the factory,
she also sell things. “If I only rely on my wage, it won’t be
enough.”

“I
also sell (through media) online,” T responded. Athough her husband
works, his wage is barely enough to cover both of their children’s
needs. “To get more income, my husband also is become a Grab
driver. But if the company is shut, what will happen to us? !”

July
2nd,
2018 the management of PT Kaho 2 announced to stop the production in
October 2018. The production will be moved to PT Kaho in KBN (Kawasan
Berikat Nusantara/Nusantara Bonded Zone) Cakung ,Jakarta. In the
letter, the labours are given two choices: to resign or to continue
working in Kaho.

“All
this time, we did not demand anything. Why are we treated this way,”
R protested. R felt being neglected and underestimated. PT Kaho
applied for minimum wage suspension twice in a row, in 2013 and
2014.

PT
Kaho 2 previously was PT Karwell Indonesia, is an apparel company.
In 2006, all of Karwell shares were acquired by Kaho. In the same
year, PT Kaho 2 received orders to produce Nike sports clothes. The
total Nike order was 80 percent from the total production. The rests
came from Magistic and Fantastics.

Not
long after the announcement, sewing machines in the printing,
embroidery and packing line were moved to KBN. Around 300 workers
were asked to resign. Up to September 2018, the number of workers
who resigned reached 1500. Then workers who had resinged were offered
to work in different section under the status of probation. Today,
there are 500 worers left.

It
seems that there was no options. The only option was to resign. “The
workers were approached by their chief and forced to resign. There
were some who were called one by one. Even the ones who were willing
to move were also asked to resign,” explained T.

On
October 1, 2018, PT Kaho 2 announced that production ended on October
12, 2018. Again workers were only given two choices: resign or
participate to move. Unfortunately, the letter did not mention the
mechanism for the transfer of workers. Meanwhile, among the workers
there were rumors. He said, workers who refused to move would not get
anything. About 1800 workers resigned. Finally, the survivors refused
to relocate and demanded clarity on the mechanism for transferring
around 200 people.

On
October 12, another report letter from PT Kaho 2 management regarding
production closure came out again. In the letter also affirmed,
workers who do not resign means automatically become workers at PT
Kaho on KBN. For the umpteenth time, PT Kaho 2 ignores the existence
of trade unions.

One
of the workers who signed the move to PT Kaho KBN Cakung showed his
work agreement. In the letter said that the amount of wages received
did not change. However, the allowance, compensation and work
placement policies follow PT Kaho KBN Cakung’s policy.

***

Why
the company offered a ‘resignation’ program? Because the
compensation that must be paid for ‘resignation’ is smaller than
that of termination of employment (PHK). However, the regulation
said that one of the conditions forresignation is that it must be
done upon workers’ own will without any indication of pressures
from the company. It means that resignation scheme offered by the
company violates the
law.

Manpower
Act Number 13 of 2003 and Law Number 39 of 1999 concerning Human
Rights regulates the right to work: everyone has the right to freely
choose the job he likes and has the right to fair employment
conditions. In the context of termination of employment, it is said
that the termination of the employment relationship should be based
on an agreement between the worker or labor representative (Article
155 Paragraph 2). If you do not find an agreement, only the court has
the right to make a decision (Article 155 Paragraph 3). Forcing
individual resignation to trade union members means attacks on trade
unions.

PT
Kahoindah Citragarment 2 usually known as PT Kaho 2 or Kaho Tambun
since it is loacated in Kecamatan Tambun, Bekasi, West Java. With 54
production line, the company is able to produce 700.000 pieces of
clothes each month. More than 4000 workers who mostly are women with
the same age as N, T, and R. If each worker has two dependents and
the company really shuts down its production, it means there will be
11.100 people who will lose their future.

“People
in our age will not be able to find job. Besides, there are only
contract workers now. Thefore we will fight to keep our job,”
explained the three women, when I met the on September 13th
2018

PT
Kaho 2 workers’ concern is reasonable. For the last ten years,
almost all private or state-owned companies employ contract workers
or outourced workers. Frequently, job seekers must apply through
employment agency by paying huge amount of money.

Hunting
for Bigger Profit

PT
Kahoindah Citragarment 2 is one out of six Hojeon’s subsidiaries.
Hojeon is a garment business group based in South Korea. Hojeon’s
subsidiaries are operating in Indonesia and Vietnam. Hojeon stepped
its foot on Indonesia in 1991 through PT Kahoindah Citragarment 1
then PT Kahoindah Citragarment 5. Both are in KBN (Kawasan Berikat
Nusantara Cakung). Then, PT Kahoindah Citragarment 2 (1994) and PT
Daehwa Leather Lestari (1994) in Bekasi District, West Java, PT
Yongjin Javasuka I (2005), PT Yongjin Javasuka II (2008), PT Yongjin
Javasuka III, (2015) in Sukabumi, West Java, and Viet Thanh Garment
(2015) in Vietnam.

September
2017, PT Kahoindah opened a new factory in Garut, West Java. It is
150 thousands square-meter Garut is one of the districts with lower
minimum wage compared to Jakarta or Bekasi. Garut minimum wage for
2018 is Rp 1.6 million per month, meanwhile Jakarta’s minimum wage
is Rp 3.6 million and Bekasi District is Rp 3.8 million per month.

Hojeon
supplies famous brands: Under Armour, Nike, The North Face, Adidas,
Athleta, Oakley, Majestic, Vf, Swix, Kjus, Fanatics, Louis Castel
Paris, Berghaus, Bauer, Salomon, Ulvine. The orders are spread into
Hojeon’s subsidiary factories. For instance, Nike apparel is made
in Kaho 2, Nike material is made in Daehwa, and Under Armour is
made in Kaho 1.

Hojeon
was established in 1985. Hojeon was expanded during GSP (General
System of Preferences) Policy. GSP is a free scheme of import duties
for goods sold to the United States, which is valid since 1974. The
scheme is also applicable in Hong Kong, Singapore, Taiwan, Indonesia
and other developing countries.

When
the GSP of the four countries was revoked, Indonesian Government
still struggling with industrial strategy modification: from import
substitution into export oriented. Indonesian Government opened free
trade zones: Batam (1973), SIER (Surabaya Industrial Estate
Rungkut/1974) and KBN (Kawasan Berikat Nusantara/1986). Minimum
wage regulation was introduced and control towards labor unions was
intensified.
With export oriented industrial strategy, Indonesian market is more
open to foreign capital and left domestic businessmen out.

***

Upon
knowing the closure plan, the Labor Union makes a move. In Kaho 2,
there are two Unions, which are FSBB KASBI (Federasi Serikat Buruh
Bekasi Kongres Aliansi Serikat Buruh Indonesia) and SPN (Serikat
Pekerja Nasional). FSBB KASBI is willing to move as long as their
entitled rights are fully given. SPN demands that the process of the
company closure must be done through termination of employment
mechanism.

On
July 16, a negotiation between SPN and management representative
occured. One of the agreed terms was that the company would ensure
that it will give workers rights fully and there will not be any
forced resign. However, the company did not agree to pay severance
for terminating its workers as demanded by workers who refuse to
move.

“I
have sent a letter to Nike in America. There is no response,”
explains Muhammad Nur, Chairperson of SPN Kaho 2. He felt
disappointed by Kaho management and was confused with Nike. Everyday,
his members ask him what will happen to the future of their job.
“Last week, we sent a letter to Nike Indonesia, to request a
hearing . The letter was received by the security unit.”

“They
promised they would move us to new factory. But it wasn’t clear
about the mechanism,” said Asep, Chairperson of FSBB KASBI PT Kaho
2.

The
company’s promise to move workers to Kaho Cakung, Jakarta, made
Muhammad Nur curious and tried to get infomration on the the compay
they were going to move to. He then found out that PT Kaho 1 and 5
have been operating for so long. Rumor has it, , there will be Kaho 6
for printing and Kaho 7 for warehouse. However, Muhammad Nur doubts
that his members will receive the same rights as they did in Kaho 2.
Let alone, minimum wage in Jakarta is far lesser than Bekasi
District.

With
an area of 176,7 hectares, KBN Cakung is inhabited by various garment
companies. Most of them are South Korean and Taiwanese companies.
GAP, Adidas, H&M, JC Penny, Under Armour and other well-known
apparel brands are produced in KBN Cakung.

The
last three years, the number of the companies in KBN Cakung is
drastically decreased. In 2017, there are only 30 companies recorded
from 200 companies in 2014. Some companies moved their production to
suburbs in West Java and Central Java. Thsi of course because those
areas have more water supply, lower minimum wage and abundant
laborers. There are also companies which moved to other countries
such as Ethiopia and Malaysia.

Interviewed
by KBN Factory Magazine,
The manager of Kahoindah Citragarment, Djauhari Sutiono, mentioned
that the relationship of the laborers with the management is like a
family. According to him, “Kaho does not only pay its workers
minimum wage as stated by the law, but there facillities needed by
workers. Such as sanitation, polyclinic, recreation, even some sports
facilities are provided by the company.”

“It
means even if we work in KBN, it will be only temporary. We will be
moved somewhere else eventually,” explained Muhammad Nur.

“If we move to KBN, that means there will be more expenses,” replied R. Muhammad Nur, N, R, and T wished they could still work at PT Kaho.

Nike apparel. Source: Nike Manufacturing Map, August 2018

Automatitation:
Maximum Work, Minimum Wage.

There
is different information. On June 28, 2018, the HRD (Human Resource
Department) of PT Kaho 2 sent a notification letter to Labor
Department of Bekasi District. The content in the letter was quite
different from the one announced to workers.

he
letter from HRD mentioned that the production stoppage in of Kaho 2
is because Nike stops its order. “Workers can keep their job but
move to PT Kaho 5 or take the compensation through as regulated by
the
law,” explained the letter.

The
Director of International Union Education League, Jeffery
Hermanson,
confirmed the Nike’s closure plan. According to him, Nike will cut
some of its supplier factories, especially in the apparel section in
Indonesia. He then invited Indonesian business and unions to respond
the plan because it will affect negatively on Indonesia’s
employment.

On
April 2018, Jeffery Hermanson met one of employer association
representative in Jakarta. “They (employers) do not respond
seriously towards the Nike apparel closure plan. Even they said that
Nike apparel’s closure plan was because the minimum wage in
Indonesia is too high,” explained Jeffery Hermanson.

For
the time being, It is only PT Kaho 2 that has the information
about Nike’s closure plan. There is also news about Nike’s
shoes order pull out from PT Dean Shoes Indonesia and Nike
accessories from PT Dream Sentosa Indonesia. Local
Labour Department said that the closure of the two companies because
of high minimum wage in Karawang District.
Using minimum wage as the reason for company closure does not many
any sense. Since 2015 the minimum wage was set based on the formula
of Wage Regulation Number 78 of 2015. The formula of minimum wage
which is highly supported by employers and the government.

PT
DSI (Dream Sentosa Indonesia), an accessories supplier company for
Nike is located in Karawang. This company employs 10,000 workers,
mostly women. In 2013, PT DSI filed wage suspension payment by
violating the law. In December 2017, this company announced its
closure and forced its workers to resign. Workers who refused were
sued by the company under the charge of act against the law. The
lawsuit was declined by the court. But workers who refused to resign
were not reinstated yet.

How
about other Nike apparel suppliers? Everything seems to be normal.
Workers representative in Nike apparel suppliers such as Dong A Decal
Jakarta, Inc., Eagle Nice Banten, and Kukdong Bekasi mentioned that
the production runs as usual.

“In
our workplace (Eagle Nice), there is a recruitment and the company
opens a new building,” said one of the Eagle Nice, workers.

Worried
of a sudden shutdown, a workers representative of PT Kukdong,
Bekasi,sent a message to PT Kukdong’s management and Nike. Nike’s
replyis not satisfiying. “There is a plan to end the order by the
end of 2018. But the reason is remain unclear. Nike mentioned the
reason of the stoppage was because Nike suppliers reconsolidation,”
said a Kukdong worker.

Kukdong
International is a giant company from South Korea. It has two
factories, in the Bekasi Regency of West Java (PT Kukdong
International) with a number of workers of more than 1000 people and
in Semarang Regency, Central Java (PT Semarang Garment) with more
than 2500 workers. Workers’ representatives were informed that PT
Kukdong Internasional Bekasi would approach production in March 2019
and PT Semarang Garment in 2020.

The
workers’ representatives were informed that PT Kukdong Internasional
Bekasi would approach production in March 2019 and PT Semarang
Garment in 2020. “He said management would survive and would
look for another order. If other orders enter, especially in small
numbers we are worried that the rights we had been receiving will be
reduce, “complained a worker at PT Kukdong International.

Kukdong
workers’ concern is reasonable. Similar to what happen in KBN, for
the last five years, garment companies in Bekasi, Bogor, Tanerang,
Depok, and
Bandung move their
production ot West Java periphery and Central Java. The reason
varies. Form compaining high minimum wage to expiry of their rent.
However, generally, before they move, the companies always lay off
their workers using early retirement or resign.

In
PT Kukdong Bekasi, Nike’s production is 100 percent. It employes
more than 1000 workers, mostly are women who have been working for
more than 20 years. Not only that. Workers think that their income
has brought lives to the community around the factory. “If the
company is shut down and we don’t work, there is a posibility that
our children cannot pursue their education anymore,” added the
worker.

Nike workers must be vigilant. All this time, relationship between suppliers and brands is not widely known. The auditor buyers who work for the brand are not necessarily willing to disclose information, let alone help if the company really closes. Companies just shut themselves down without noticed, didn’t they? Just to name a few Kizone, an Adidas supplier in Tangerang was closed in 2012; Miyungsung, an Inditex, Walmart as well a Aeropostale supplier in KBN Cakung was closed in 2013; and Hansoll Hyunn in subang, West Java, was closed in 2017. If we see Kaho 2’s explanation to workers; it did not mention Nike’s order stoppage. If a company closes, it is workers and unions who are left to blame.

In
May 2018,
Nike Inc said that it has 542 suppliers in 42 countries. That number
of suppliers is controlled by 30 corporate groups. Five months after
that, the data showed that the number of Nike supplieirs were only
529 in 41 countries. Furthermore, International
Trade Union Confederation (ITUC, 2016)
data shows that the number of Nike suppliers reached 709 suppliers
in 44 countries. it means that since the last two years 167 factory
suppliers in two countries have been trimmed.

To
the mass media in Jakarta, Nike Indonesia gave information. Global
Nike has planned to reduce its supply chain since the last ten years.
“We are working with each supplier group to carry out
responsible exit processes, provide clear notifications and clear
volume reduction schedules, which allows suppliers with opportunities
with opportunities to get new buyers,” explained
Nike on his website.

Surprisingly,
the information submitted by Nike from its website still mentions the
reduction in the number of suppliers from 785 to 529. Though the Nike
‘manufacturing data’ that has been updated in 2018 mentions 41
countries with 529 suppliers.

On
October 15, 2018, the representative of Dong A Decal KBN Cakung said
that Nike would end its production by the end of 2018. Dong A Decal
is South Korean company began operations in 2011 employing 960
people. Since its establishment, Dong A Decal has produced Nike
apparel as much as 90 percent of its total production. Nike’s
production line has been reduced from 15 lines to 5 lines. Currently
there are 528 workers who work.

By
automating production, human resource observers usually emphasize the
need for new abilities and skills for workers and prospective
workers. While business associations often use new technology as a
tool to conquer workers. Most new technological presence in Third
World countries is accelerated by various free trade agreements.
Workers’ daily experience shows that the emergence of new
technologies will be accompanied by dismissals, makingworkers work
more intensive and longer with lower and lower wages.

In
2017 at PT Kaho 2there came new machines in printing section. “The
work which used to be done manually. Now everything is automatic.
The production is increased from 200 pieces to 1,000 pieces, “said
R. At that time, Kaho 2, reduced its production line, from 52 to 30
production lines. The process of reducing the production line is
followed by an early retirement offer.

“If
a production sector succeeds in closing without responsibility from
Nike, it means that other production sectors will follow soon. This
can also be followed by other brands. Therefore, the trade union must
urge to refuse the withdrawal of Nike orders from factories in
Indonesia, “said Jeffery Hermanson.

Translated
by: Arif Nursyamsi and Dina Septi

This
article was first published in bahasa Indonesia Sedane Magazine, on
October 13, 2018. Updated again on October 17, 2018.

ENGLISH

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